Many cryptocurrencies, including Bitcoin SV (BSV), Ethereum Cash (ETC), and Litecoin Cash (LCC), have been the target of 51% attacks in the past, despite being supported by blockchain technology that guarantees security, immutability and total transparency. While there are several ways that hostile parties can and have exploited blockchains, a 51% attack is a situation whereby a group of miners compromise the blockchain to take control of over 50% of the network mining hash rates.
One of the most expensive ways to breach a blockchain is a 51% attack, with smaller networks being the most vulnerable.
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What Is A 51% Crypto Attack?
Understanding how blockchains store transactions, validate them, and the many protections built into their architecture to thwart any tampering is crucial before diving into the tactic used in a 51% attack. A blockchain validates every transaction on its network of nodes and records it permanently. However, blocks are connected by cryptographic techniques to enable the recording of every transaction taking place on the web.
A proof-of-stake (PoS) blockchain needs nodes to stake a set amount of the native currency to acquire validator status, in contrast to a proof-of-work (PoW) blockchain, where nodes must solve challenging mathematical puzzles to verify transactions and add them to the blockchain. In any case, commanding more than 50% of the staked tokens in the blockchain or controlling the network’s mining hash rate can be used to launch a 51% attack.
Imagine if more than 50% of all nodes that carry out these validating duties band together to release a new version of the blockchain or carry out a denial-of-service (DOS) attack to comprehend how a 51% attack operates. The latter is a 51% attack in which the attacking nodes add new transactions to the new and existing blockchain to achieve their tasks. In either scenario, attackers risk undoing transactions and spending the native crypto token twice, equivalent to printing fake money.
A 51% attack of this kind may damage the entire network and inadvertently result in significant losses for holders of the native coin. For large blockchains like Bitcoin or Ethereum, altering the original blockchain needs an incredible amount of computer power or staked cryptocurrency, but for smaller blockchains, it isn’t as tricky.
Even a DOS assault can potentially stop the blockchain from working and negatively affect the value of the underlying cryptocurrency. Only the most recent or upcoming transactions made on the network are in danger because it is unlikely that the network can reverse transactions older than a specified cut-off.
Is A 51% Attack On Bitcoin Possible?
As more hashing or processing power is helpful per second for mining on a PoW blockchain, the likelihood of a 51% attack lowers. In the case of the Bitcoin network, criminals would need to have access to at least 1.3 million of the most potent application-specific integrated circuit (ASIC) miners to control more than half of the Bitcoin hash rate, which is currently estimated to be 290 exahashes/s.
To have a chance of carrying out a 51% attack on the Bitcoin network, attackers would have to spend about $10 billion on mining equipment. Other factors include the price of electricity and the fact that they would not be eligible for any of the mining benefits offered to trustworthy nodes.
Smaller blockchains like Bitcoin SV have a network hash rate of about 590PH/s, as such, making the Bitcoin network about 500 times more powerful than SV.
However, on a PoS blockchain like Ethereum, nefarious parties would need to control more than half of the entire amount of Ether tokens that are in staking contracts. Simply buying the necessary processing power to have a remote chance of conducting a successful 51% attack would cost billions of dollars.
Additionally, if the alleged attack is unsuccessful, all staked tokens might be seized or locked, dealing a severe financial blow to the parties involved.
How To Detect And Prevent A 51% Crypto Attack On A Blockchain
We are verifying that no single entity, group of miners or even mining pool owns more than 50% of the network’s mining hash rate or the total number of staked tokens would be the first step in vetting any blockchain.
Blockchains must continuously monitor the parties engaged in the mining or staking process and take corrective action as necessary. Unfortunately, the Bitcoin Gold (BTG) blockchain could not foresee or stop this from occurring in May 2018. A subsequent attack in January 2020 resulted in the double spending of roughly $70,000 worth of BTG by an unidentified actor.
In each of these cases, the 51% attack was made possible by a single network attacker seizing more than 50% of the hashing power, followed by extensive reorganisations of the initial blockchain that went back and undid completed transactions.
The frequent attacks on Bitcoin Gold highlight the significance of using ASIC miners rather than less expensive GPU-based mining. Attackers don’t need to spend a lot of money on more expensive ASIC miners to launch a 51% attack on the Bitcoin Gold network because it uses the Zhash algorithm, which enables mining even on consumer graphics cards.
The 51% attack example does demonstrate the superior security controls provided by ASIC miners as they require a higher investment to obtain and are created specifically for one blockchain. However, even a small number of them could potentially control more than 50% of the lower network hash rate of the altcoin if other crypto miners opt for altcoins. Vertcoin (VTC), Hanacoin (HANA), Expanse (EXP), Verge (VXG), and Litecoin Cash (LCC) are just a few examples of blockchain platforms that saw a 51% attack, according to the DCI project.
This 51% attack illustrates the more significant security measures provided by ASIC miners, which require a higher level of investment and are created particularly for a particular blockchain, rendering them useless for mining or attacking other blockchains.
However, it highlights the reduced risks of 51% of attacks on PoS blockchains, making them less appealing to network attackers. It is one of several reasons why a rising number of networks are transitioning to the PoS consensus mechanism.